Odds ratio

[Julianna Grato]

I am running a logit model for the probability of a female being in the labor force. One of my right hand side variables is the number of children under the age of 5. I got an odds ratio of .69. Looking through the internet I can only find the interpretation on dummy variables for odds ratios. How would it interpret it for children under the age of five? Thank you.

[Clyde Schechter]

It means that for each additional child under the age of 5, the odds of being in the labor force decline by a factor of 0.69.

So, to be concrete. Let's suppose that the odds of being in the labor force when you have no children under age 5 is 1, i.e. the probability = 0.5. Then for women with 1 child, the odds are 0.69 (which corresponds to a probability of 0.41 approximately). Among those with 2 children under t, the odds are 0.69*0.69 = .4761, which corresponds to a probability of about 0.32, etc.

[Julianna Grato]

Thank you so much Clyde.